Preliminary Study on the Implications of an Extension of the Small Business Loans Act to Capital Leasing

Prepared by Dr. Basil A. Kalymon
Kalymon Consulting Ltd.

October 31, 1995

Study submitted to Industry Canada in accordance with Contract No. 67HPE-5-0418

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Table of Contents

• Executive Summary
  
  
• I.  Introduction
  
  
• II.  Background on Small Business Financing
  • A.  Needs of Small Business
  • B.  Report of the Standing Committee on Industry
  • C.  Report of the Small Business Working Committee
  • D.  Small Business: A Progress Report
  • E.  Presentations of Canadian Finance & Leasing Association
    
    
• III.  Small Business Loans Act - Background
  • A.  Historical Background
  • B.  Extensions of 1993
  • C.  Revisions of 1995
  • D.  Recent Performance
    
    
• IV.  Small Business Loans Act - Key Provisions
  • A.  Purpose of Loans
  • B.  Designated Lenders
  • C.  Level of Government Liability
  • D.  Eligibility of Borrowers
  • E.  Eligibility of Loans
  • F.  Permitted Interest Rates
  • G.  Fees Charged
  • H.  Security Required
  • I.  Default Conditions
    
    
• V.  Description of Capital Leasing
  • A.  Definition of a Capital Lease
  • B.  Purpose of Leasing Instrument
  • C.  Security in Lease Contract
  • D.  Credit Assessment
    
    
• VI.  Structure of Leasing Industry
  • A.  Size of Industry
  • B.  Involvement in Small Business Lending
  • C.  Sources of Funding
  • D.  Regulatory Structure
  • E.  Loss Ratios in Industry
    
    
• VII.  Key Issues Raised by Extension of SBLA
  • A.  Incremental Capital Provided
  • B.  Impact on Cost Recovery in SBLA
  • C.  Other Changes Required in SBLA Regulations
    
    
• VIII.  Further Study Required
  • A.  Characteristics of Leasing Clients
  • B.  Loss Ratios in Leasing Portfolios
  • C.  Criteria for Lessor Eligibility
  • D.  Model of Lease Accounting
    
    
• IX.  Conclusions and Recommendations
  
  
• Appendix A: Reference List
• Appendix B: Interview List